What's happening with the minimum wage in Minneapolis?

The Minneapolis City Council laid out the basics of a minimum wage ordinance on Friday, asking staff to finalize a draft ordinance that would make Minneapolis the latest in a series of major U.S. cities to dramatically raise their minimum wage.

Here's a quick primer on the issue:

Q: What's happening with the minimum wage in Minneapolis?

A: The City Council is working on an ordinance that would raise the minimum wage to $15 an hour, and should vote on the ordinance before the end of June.

Q: Will it pass?

A: It looks like it. A majority of the council has said they support a $15 minimum wage, with no tip credit. Certainly nobody has come out strongly against those things, and the council passed a motion Friday asking staff to write an ordinance that raises the wage to $15, without a tip credit.

Q: How long until it would take effect?

A: Four years from adoption for large businesses, the council said Friday. There will be up to two other tiers of smaller businesses with longer phase-ins, but the details of that (including what size of business constitutes a smaller business) haven't been ironed out.

Q: What is a tip credit and why is everyone talking about that?

A: A tip credit (or penalty, or carveout) is a mechanism whereby tips count toward the minimum wage. Whether to use that mechanism has been one of the most divisive features of the debate. Take a waiter, for example. If he or she earns $9.50 per hour as a base wage (the current, statewide minimum wage), then a tip credit would mean that so long as the waiter makes $5.50 per hour in tips, their employer would be in compliance with a $15 minimum wage.

Q: Who's opposed to a tip carveout?

A: The mayor, a majority on the City Council, unions, the group 15 Now and advocates all over the city. Unions, in particular, have a philosophical objection to a two-tiered wage system. They are proud that Minnesota is one of only seven states that doesn't have a lower legal minimum wage for tipped workers, and want to keep it that way.

Q: Who wants a tip credit?

A: Restaurant owners say most of their tipped workers already make well over $15 per hour including tips, and since their tips count as wages for all other legal purposes, they ought to count as wages for the purpose of a minimum wage. Many servers and bartenders agree, because they believe a $15 minimum wage without a tip credit will force restaurants to change their business model and either get rid of tipping or get rid of some of their servers.

Q: Why would restaurants do that?

A: It's not 100 percent clear they would, but here's the argument: If all servers make a base wage of $15 per hour plus tips, many of them will earn twice or sometimes three times as much as the cooks and dishwashers in the back of the house. That would force restaurants to not only pay servers dramatically more, but also to pay back of the house workers dramatically more to maintain some level of fairness. For even a small restaurant, the cost of that wage increase could be up to 10 percent of annual revenue, which they say would be devastating. So they'd have to make some sort of change to their business model.

Q: What's the City Council's position?

A: It looks like a tip credit is off the table as of Friday. The business community has a history of predicting doom when government moves toward raising the minimum wage, and though they may not be crying wolf in this case, businesses don't appear to have the ear of the City Council on the matter. Council members point out that 71,000 people will get a pay raise under the ordinance, and argue that any negative effects are outweighed by that benefit.

Q: What about teenagers? Will they automatically get a $15 minimum wage?

A: Pretty much. The proposed ordinance will likely include a youth training wage — a different minimum wage for people under 20 for the first 90 days on the job. But after three months on the job, they'll qualify for the full minimum wage.

Q: What has happened in other cities that have raised their minimum wage to $15?

A: It's too early to know. Seattle is the only major city with a $15 minimum wage, for some employers, and it went into effect in January. San Francisco is next. That city's minimum wage will rise to $14 on July 1, and then $15 on July 1, 2018.

Q: What's next?

A: The council should have a formal draft ordinance by June 5. They'll hold a public hearing on June 22, and then they'll vote on the ordinance before the end of June.